Wake Radiology, UNC Rex create X-ray giant

Wake Radiology, the Triangle’s oldest and largest X-ray and imaging provider, is creating a joint venture with UNC Rex Healthcare that they say will lower costs of mammograms, brain scans and other tests.

At its most basic, the deal expands the radiology labs affiliated with Rex throughout the Triangle. A bigger plus for patients is that the two partners said they will break with longstanding industry practice and charge lower fees at five Rex radiology clinics that will become part of the joint venture. Hospital-owned radiology labs typically charge hospital fees even if the labs are not near the hospital.

Rex and Wake Radiology did not provide costs comparisons Thursday, however, saying prices vary by insurance company. But they plan to file additional information with the N.C. Department of Health and Human Services on Tuesday as part of an application for a state certificate of need for their joint venture.

According to Blue Cross and Blue Shield of North Carolina, an abdominal CT scan costs between $1,000 and $1,600 at Triangle hospitals while the same service at a private clinic is about half that.

Thomas Williams, vice president of ambulatory services at UNC Rex Healthcare, said charging higher hospital rates at hospital-owned radiology centers has been the norm nationwide. He said Rex may be the first hospital in the state to lower radiology fees.

“As I understand, we’re the first to proactively do this,” Williams said. “If I’m a patient I’ve got more locations I can go to and at a cheaper price.”

The joint venture, if approved by state health regulators, would also redefine longstanding business affiliations in the Triangle health care market. Rex has contracted with Raleigh Radiology, Wake Radiology’s primary competitor, for more than 50 years, to interpret diagnostic tests. But as a result of the joint venture, Wake Radiology, with a dozen locations and more than 50 doctors, will assume those functions.

Raleigh Radiology, which has only six locations, will lose its Rex contract in July. The company declined to comment on Thursday. Rex’s Williams said Wake Radiology’s dozen locations throughout the Triangle were a better match for Rex’s outpatient radiology facilities in Wakefield, Holly Springs, Knightdale, Cary and Raleigh. The new radiology joint venture will take diagnostic images, and Wake Radiology will have an exclusive contract to interpret the data.

The Rex deal does not affect Wake Radiology’s contract as exclusive radiology provider for WakeMed Health & Hospitals, a business relationship that goes back to 1961. Wake Radiology was founded in 1953.

Rex and Wake Radiology said the partnership will improve the coordination and delivery of medical services in the area by reducing the need for duplicate services and and increasing response times for referring physicians. The company’s services include mammograms, MRIs, CT scans, ultrasounds, port insertions and catheter placements, among other screenings, tests and procedures.

“We can become larger with a greater degree of subspecialization,” Jordan said. “Becoming larger and stronger with a partner who has the same aspirations made sense for Wake Radiology.”

Williams said the state permit application is required because the radiology facilities will need to be reclassified so they can charge lower, non-hospital rates. If the state permit is granted, the lower fees that Rex says it would charge would typically be paid by the patient’s health insurance company, unless the patient has an unpaid deductible or is paying out of pocket.

The process for the certificate of need can be lengthy, with challenges possible from competing health care organizations.

The joint venture would not change the total number of facilities in the area, although it would expand Rex’s reach.

“By going from five locations to 17 locations, it allows us to provide patients imaging services a lot closer to their home and where they work,” Williams said.

This story was originally published January 12, 2017 at 12:14 PM with the headline "Wake Radiology, UNC Rex create X-ray giant."